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Flutter Entertainment plc (FLUT)·Q2 2025 Earnings Summary
Executive Summary
- Q2 results were mixed on the headline: “Primary EPS” (per S&P, aligns with company Adjusted EPS) beat consensus by ~$0.84 (2.95 vs 2.11*) on stronger US profitability, while revenue was roughly in line/slightly below ($4.19B vs $4.22B*) . Values retrieved from S&P Global.
- Flutter raised FY25 guidance midpoints to $17.26B revenue (+$0.18B) and $3.295B Adj. EBITDA (+$0.115B), with upgrades concentrated in the US, and International unchanged; interest expense midpoint rose to $535M on Boyd financing .
- US iGaming outperformance (+42% YoY revenue) and record June sportsbook gross revenue margin month underpinned a 530 bps YoY US EBITDA margin expansion (22.3%); group Adj. EBITDA grew 25% YoY to $919M (21.9% margin) .
- GAAP net income fell 88% YoY to $37M, with EPS down to $0.59, driven by non‑cash Fox Option revaluation, higher amortization of intangibles from Snai/NSX, and higher tax expense; adjusted EPS rose to $2.95 on EBITDA strength .
- Near‑term catalysts: upgraded FY guide, 100% FanDuel ownership and ~$65M annual market access savings from Boyd, mitigation actions (Illinois transaction fee), continued buyback program (target ~$1B in 2025) .
What Went Well and What Went Wrong
What Went Well
- US profitability inflected: US Adj. EBITDA rose to $400M (+54% YoY) with margin +530 bps to 22.3% on operating leverage and product‑led margin expansion .
- Record product engagement and margin: “June … highest gross revenue margin month on record of 16.3%,” with structural sportsbook margin up 70 bps to 13.6% on SGP penetration and live betting; iGaming revenue +42% YoY with AMPs +32% .
- Execution on strategy/M&A: closed Snai and NSX, leadership in Italy (30.2% online share), Brazil scale position; large migrations (Sky Bet >9M customers; PokerStars Italy) to shared platforms; management reiterates $300M cost program confidence .
Quotes
- CEO: “Revenue grew by 16% year‑on‑year… Since Q1, Flutter … accelerated ownership of FanDuel to 100% … became the largest operator in Italy with Snai … and established a scale position in Brazil through NSX.”
- CEO on product: “Fanduel’s same game parlay experience … underpinned a further … margin expansion … We also expanded SGP live to tennis … delivering a record Wimbledon.”
- CFO: “We are upgrading our full year adjusted EBITDA guidance … to $3,295,000,000 … US revenue $7,580,000,000 and $1,245,000,000 adjusted EBITDA.”
What Went Wrong
- GAAP compression: Net income down 88% YoY to $37M; EPS to $0.59, reflecting Fox Option fair value charge ($81M vs $91M gain prior year), higher amortization (+$62M YoY), and higher taxes (+$115M YoY) .
- Cost pressure pockets: Unallocated corporate overhead +60% YoY to $72M (FX revaluation, inflation, Flutter Edge investments); International cost of sales +320 bps (mix shift to iGaming, Snai/NSX, Brazil taxes) .
- Regulatory headwinds: Illinois wager fee increased operating costs; Flutter to implement $0.50 per‑bet fee from Sep 1 to mitigate; guidance assumes partial state tax headwind offset by Boyd savings .
Financial Results
Headline metrics vs prior periods and S&P Global estimates
*Values retrieved from S&P Global.
Notes: S&P “Primary EPS” tracks company “Adjusted EPS” in recent periods (Q1 actual 1.59; Q2 actual 2.95) .
Segment performance
Revenue mix and KPIs
US market share snapshot (Q2): sportsbook GGR 41%, NGR 44%, iGaming GGR 27% .
Guidance Changes
Drivers of upgrade: favorable US sports results in May/June (+$100M EBITDA), Boyd market access savings (+$35M), tax changes in IL/NJ/LA (net -$40M) largely offset, and timing of new state launches .
Earnings Call Themes & Trends
Management Commentary
- Strategy/M&A: “We … accelerated ownership of FanDuel to 100% … became the largest operator in Italy with the addition of Snai; established a scale position in Brazil through NSX; and successfully executed two transformative customer migrations.” — Peter Jackson, CEO .
- US product/hold: “Same Game Parlay+ and profit boost … have been really pleased with engagement … [and] expanded … live to tennis … record Wimbledon for FanDuel.” — CEO .
- Cost and leverage: “We expect leverage to increase in the near term [Boyd financing] but then reduce rapidly … We remain committed to our medium term leverage ratio target of 2.0–2.5x.” — CFO .
- Guidance framing: “We are upgrading our full year adjusted EBITDA guidance … to $3,295,000,000 … US … $7,580,000,000 revenue and $1,245,000,000 adjusted EBITDA.” — CFO .
Q&A Highlights
- US marketing leverage and phasing: Sales & marketing as % of revenue down ~440 bps YoY; ~$20–25M marketing shifted into H2 for NFL/NBA seasonality .
- Illinois mitigation: $0.50 transaction fee introduced; guidance does not assume the fee is taxable; will adjust if state treatment changes .
- Market access economics: Boyd renegotiation sets a lower benchmark; broader renegotiation opportunities exist but largely from 2030 onward .
- New state cost template: ~$35M contribution loss per 1% population; Missouri (~1.8%) implies ~$70M EBITDA loss—consistent with guide .
- Cost of sales levers: Payment processing initiatives, fraud reduction, focus on geolocation and other large cost buckets; non‑tax COGS scaling opportunities continue .
Estimates Context
- Q2 2025: Revenue $4.187B vs $4.217B* (slight miss), “Primary EPS” 2.95 vs 2.11* (beat); Q1 2025: Revenue $3.665B vs $3.700B* (slight miss), “Primary EPS” 1.59 vs 1.89* (miss) . Values retrieved from S&P Global.
- Street models likely need: higher US EBIT/EBITDA flow‑through (marketing leverage, SGP/live margin), slightly higher interest expense, and incorporate Boyd savings offsetting state tax headwinds .
Estimates detail
*Values retrieved from S&P Global.
Key Takeaways for Investors
- The quality of earnings improved: strong US operating leverage and product‑led margin expansion drove a material EPS beat despite modest revenue variance vs consensus .
- FY25 outlook raised with upgrades centered in US; International steady. Importantly, management explicitly quantified sports result tailwinds and offsetting tax dynamics, plus Boyd savings that largely neutralize incremental 2H tax headwinds .
- US iGaming leadership is a durable differentiator (AMPs +32%, revenue +42%), with jackpots, exclusive content and Rewards Club scaling—this should support mix, margins, and LTVs into NFL season .
- Regulatory risk is being actively mitigated (IL transaction fee; marketing/promotional optimization; market access repricing), reducing downside to state‑level tax changes .
- Balance sheet/capital returns: available cash
$1.7B, net leverage 3.0x incl. Snai; continued buybacks ($1B in 2025; new $245M tranche announced for Q4) provide downside support while M&A/investment remains flexible . - Watch list: US sports outcomes normalizing into NFL; Missouri launch phasing costs; Brazil execution (product roadmap, unit economics) and Italy migration benefits through 2026 .
- Near‑term stock drivers: sustained US margin/EBITDA momentum in Q3–Q4, evidence of IL fee mitigation holding, and further proof points on iGaming share and customer monetization .